Mark Carney’s exit to Britain big “loss” for government

OTTAWA — Prime Minister Stephen Harper’s government, which often warns of international economic “shocks” that could imperil Canada’s finances, has been buffeted by its own political bombshell.

Bank of Canada Governor Mark Carney’s announcement Monday that he will leave his job next June — 18 months early — to head England’s central bank left the government in a tight spot.

Indeed, the government itself has not had much advance notice of Carney’s plan and now — amid continuing concern about the potential economic fallout from instability in Europe and the United States — a new central banker must be chosen by next summer.

For months, Carney had been publicly denying rumors he was in line for a job as head of the Bank of England.

He revealed Monday that the courtship for the job — he said he did not formally apply — had been “on and off” for some time, and that the discussions “really only intensified in the last two weeks.”

Carney said he knew he wasn’t going to be Canada’s central banker “forever”.

“Where I saw strengths here and confidence here, I weighed that against the needs and the real challenges in the U.K. and came to this decision. It was a difficult decision but I think it’s the right decision.”

Carney said the British, European and global economies are facing a “critical” juncture, adding that he wants to be at the heart of those decisions.

“It’s a decisive period for reform of the global financial system.”

For years, Harper and Finance Minister Jim Flaherty have worked assiduously to develop the reputation as strong, reliable and credible economic managers.

At the centre of their team was Carney, a sure-footed, confident star appointed by the Tories in 2008 who had since attracted international acclaim.

Carney’s monetary policy during and after the recession, his apparent ability to calm markets, and his blunt warnings to Canadians about their rising personal debt all added up to the image of a central banker who knows what he is doing.

As he sat next to Carney at a news conference Monday, Flaherty appeared weary and searched for words as he characterized the loss of his central banker as “bittersweet, positive news for Canadians.”

On the one hand, he suggested Carney’s new job in England reflects well on Canada’s international reputation as a solid economic manager.

However, he also acknowledged that he had developed a strong relationship working with Carney, travelling throughout the world and dealing with the economic crisis in 2008 and 2009.

“Mark has been a superb Governor of the Bank of Canada for five – more than five years. And so his loss will be felt.”

In a written statement, the prime minister congratulated Carney on his new job.

“In this time of global economic uncertainty, Governor Carney has done an admirable job in fulfilling the Bank of Canada’s mandate and has been a valued partner as the government has worked to steer Canada away from the worst impacts of the global economic recession,” said Harper.

“As a result, Canada remains an example to the world with its strong banks, effective regulatory environment and sound economic policy.”

Carney leaves his post on June 1 and starts his new job in England a month later.

In England, Chancellor of the Exchequor George Osborne, that country’s equivalent of a finance minister, called Carney “the outstanding central banker of his generation.

“He is quite simply the best, most experienced and most qualified person in the world to do the job,” Osborne said.

“We needed the best – and in Mark Carney we’ve got it.”

In Ottawa, the opposition NDP immediately praised Carney for his record at the head of Canada’s central bank and wished him good luck in his next job.

NDP deputy finance critic Guy Caron said that Carney started as the Bank of Canada governor at a time of great economic upheaval several years ago.

“He actually made his mark in being able to weather the storm,” said Caron, who added that Carney’s successor will have “big shoes to fill.”

A search committee will be formed at the Bank of Canada to find Carney’s successor. Governors of the bank are appointed by its board of directors, subject to approval by the finance minister and federal cabinet.

Carney said part of his responsibility lies in ensuring the bank has “potential successors”.

“The government will make its decisions, but whoever the next governor is will also want — he or she will want — to ensure that they have the support that they need going forward. And I’m very confident that that is the case today at the Bank of Canada. I would not be leaving if that were not the case today at the Bank of Canada.”

Mark Kennedy arrived on Parliament Hill in 1988 as an Ottawa Citizen political reporter and has covered eight federal election campaigns. He won a National Newspaper Award for enterprise reporting and... read more spent a decade specializing in health-care coverage. He is currently parliamentary bureau chief at The Ottawa Citizen.View author's profile